Possible 56 percent boost in water rates discussed

Cambrians likely will pay more for water and sewage treatment as of Jan. 1, unless more than 50 percent of services district customers protest the rate hikes in a process that was unofficially launched at a special workshop meeting Tuesday, Sept. 15.

Under the consensus opinion arrived at after the early-evening workshop meeting, the cost per unit of water used in a residence, for instance, could rise by more than 56 percent to $10.71 from $6.05. A unit is 748 gallons/100 cubic feet.

Why raise rates? Because Cambrians have been so successful at cutting back their water use during the drought, the district is selling less water. That water-use reduction of about 40 percent (compared with the baseline year of 2013) has drastically cut the district’s income.

However, the consensus was arrived at based on a very small sampling.

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At the workshop, Cambria Community Services District rate-study ad hoc committee members, directors Amanda Rice and Jim Bahringer, had hoped to explain some fiscal concepts to a lot of district customers, but only eight members of the public showed up.

Even so, Rice and Bahringer, who ran the meeting, and district employees Jerry Gruber (general manager) and Patrick O’Reilly (finance manager) spent about 90 minutes going through fiscal realities and various options and scenarios.

The 90-minute session became more of a Q&A than a workshop.

At each step of the presentations, Bahringer asked audience members for individual and consensus opinions.

With answers and opinions in hand from the meeting, the committee members and key staffers were to have conferred, perhaps as soon as the next day, with financial consultant Alex Handlers of Bartle Wells Associates, to discuss changes he should make to a rate study done two years ago, when the district essentially doubled its water rates to help pay for what is now a $13 million emergency water project (EWS).

Using the recent study as the basis for the new one will help keep costs down, the officials said. That’s crucial now, with the district in such a tight financial position, due in part to a delay in receiving a $4.3 million grant to help pay for the EWS (see story, Page 1).

The district is about $600,000 in the red operationally each year, O’Reilly estimated.

District reps explained that about 90 percent of the expenses for providing water and wastewater treatment are fixed, meaning they don’t change no matter how much of the service is provided. Those include costs for staff, utilities and a host of other expenses.

The district “doesn’t pay for the water,” Rice explained. “What we pay for is testing, electricity, permits, staffing. Those costs are fixed.” (The current wastewater-treatment rate is based on how much district water a customer uses.)

So because CCSD customers are using less water because of the drought, the district’s income drops, while its expenses for providing the services are reduced very little.

But, attendee Laura Schwartz cautioned, the district needs also to pay more attention to “not only how much more you can spend, but how much more can you spend money wisely.” She said, “I want to keep everybody’s feet to the fire” on that.

O’Reilly said commercial accounts consume about 25 percent of the water, but their bills cover about 45 percent of the expenses.

The report

Officials said the rate study is based on some assumptions:

The rate increase would only cover operational costs (personnel, administrative overhead and $500,000 in annual major maintenance for the two departments).

The district would use bonds, loans or grants to pay for capital projects.

No new water/wastewater service accounts would be added.

The new rate doesn’t include paying into a reserve fund.

Under the five-year plan, the district would be able to adjust the rate upward slightly each fiscal year, but the board would have to approve that change annually.

Pick and choose

Bahringer and Rice asked audience members for their preferences in such options as:

• How much more district water will ratepayers take from the tap once the drought is over? District officials think customers will continue to conserve water, as Bahringer said, “because there are so many people with catchment systems, (water-hauling) tanks on trucks” and many have permanently changed their landscaping. District use is at 60 percent of 2013 usage.

Those in the audience indicated they think the new rate should be based on a 70 percent reduction in water use, based on 2013 use.

According to district calculations, at that level of water use, rates for residential customers should be $10.71 per unit (a unit is 748 gallons or 100 cubic feet of water). The current rate per unit is $6.05. (An additional charge per unit, calculated on a sliding scale, is levied when the emergency water supply project is operating, to help cover those extra costs).

Attendee Crosby Schwartz said the district should set the rate to cover the “worst case” scenario. “You can always charge less,” he said.

Audience members agreed that the charges for water should begin with the first unit used, rather than the fifth, as is the case now. Currently the first four units reflected on a customer’s bill are covered by the “water service base charge.”

• Should wastewater treatment bills be based on how much potable water a customer uses, or on how strong the sewage is? The officials said it costs more to treat wastewater that’s laced with chemicals, fats and heavy metals.

The latter option would produce a tiered-rate system with one rate for residences, another for most small businesses (such as hotels, motels, restaurants) and a third for light industry.

A special meeting may be called in the first few weeks of October, at which Handlers is to present the revised rate study. That would officially launch the state-mandated process under which ratepayers are given the option of protesting the rate increases.

Santa Margarita

Under the same Proposition 218 rules, Santa Margarita voters Tuesday defeated (by a single vote) a 32 percent increase in their water rates, also triggered by a drop in water sales due to drought restrictions.

During the hearing Tuesday, Barbara Ahern of Santa Margarita said lamented that the community would have been punished for doing its part to conserve water.